How Nigeria ignores N600bn revenue from tobacco, alcohol

Nigeria can generate N600bn annually if it increases the excise duties on tobacco and alcohol as recommended in the National Development Update report.

A Senior Tax Specialist of the World Bank said this on Thursday at a virtual discussion on domestic revenue mobilisation.

According to Rajul Awasthi, Nigeria has one of the lowest excise duty rates on tobacco and alcohol in Africa.

He also noted the duty rate on cigarettes is lower than the standard set by the Economic Community of West African States or the one Kenya adopts.

“So, if Nigeria were to adopt the same rate of excise duty that Kenya has adopted, they can raise a significant amount of revenue, he said.

“Similarly, if they are to adopt ECOWAS, a standard, that will also raise the revue significantly. What is more important is that these two sources will not impinge on consumption growth; in fact, these harm goods.’

So, taxing them, the expert noted, is actually good from the health perspective.

“Excises on tobacco and alcohol do not impact the vast majority of people and compliance can be monitored much more easily by the compliance agencies.

“If the measures outlined in our report are implemented, these excise duties on tobacco and alcohol can raise more than N600bn a year.”

According to Finance Minister Zainab Ahmed at a virtual event by the AfDB on Thursday, Nigeria is struggling to expand its fiscal space by taking some steps, including reducing cost of governance.

She didn’t mention revenue opportunity in tobacco and alcohol.